Canada and China have reached an agreement to cool a trade fight that slammed Canadian farmers and raised tensions over electric vehicles (EVs), Prime Minister Mark Carney said.The deal will lower barriers on both sides, reopening Chinese markets for key Canadian exports while easing Canada’s heavy tariff on Chinese-made EVs.The dispute flared in late 2024 after Canada followed the United States and imposed a 100% tariff on Chinese EVs, along with added duties on steel and aluminum. China hit back with steep tariffs on Canadian goods, including canola and seafood, shutting many exporters out of a major market.Under the new arrangement, Canada will lift its 100% tariff on a set number of Chinese EV imports and replace it with a quota system. Ottawa will allow up to 49,000 Chinese EVs a year at a preferential tariff of about 6.1%, with that quota set to rise over time.Officials say the limit mirrors pre-tariff levels, keeping Chinese EVs at roughly 3% of Canada’s overall auto sales. The change is expected to lower prices for consumers while still protecting Canada’s domestic industry from a flood of imports..In exchange, China agreed to sharply reduce punitive tariffs on Canadian canola products, one of Canada’s most valuable farm exports. The tariff on canola seed is expected to drop to about 15% by March 1.China will also remove discriminatory measures that had effectively stopped shipments of canola meal, peas, lobster, crab and other seafood, according to the agreement’s details. Tariffs on pork and seafood are also being removed or reduced, restoring market access for Canadian producers in those categories.Carney framed the deal as part of a broader reset in Canada-China relations after years of strain. The agreement includes language encouraging China to spend in Canadian industries and points to possible co-operation on clean technology and energy, along with renewed diplomatic engagement.The shift marks a move away from broad punishment tariffs and toward negotiated market access. For Canadian exporters who have watched orders vanish, the change could bring fast relief — and for drivers, cheaper EV options may soon follow.
